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UAW Sets Strike Deadline in Chrysler Labor Talks

Negotiators from Chrysler and the United Auto Workers were set to resume contract talks after the union set a deadline for wrapping up negotiations this week.

Chrysler
David Zalubowski
Chrysler

The struggling No. 3 U.S. automaker has been given a 72-hour strike notice by the UAW as they negotiate a new labor agreement, a person familiar with the talks said on Monday. It was not immediately clear whether that deadline would expire Tuesday or Wednesday.

A Chrysler spokeswoman declined comment on the talks. The UAW could not be immediately reached for comment.

But the Wall Street Journal reports that several issues raised by Chrysler have slowed the talks. Those issues include funding for a union-founded trust that would shoulder billions of dollars in health-care benefits. The trust would be similar to one tentatively agreed to last month between the union and GM, but Chrysler wants to contribute less cash than GM and fund a greater amount through a bond convertible into equity, the Journal said.

Chrysler is also resisting language that would prevent it from outsourcing jobs to non-UAW workers at its U.S. factories. It also doesn't want to commit to specific future product lines in the U.S. beyond the scope of the next contract, which ends in 2011.

Negotiations between the two sides had been at a standstill for three weeks after the UAW agreed to extend Chrysler's four-year contract on wages and benefits to focus on larger rival General Motors . The union reached a tentative deal with GM late last month.

By shifting to Chrysler as his next target, UAW President Ron Gettelfinger is betting that the union, which represents some 180,000 workers at the Detroit-based automakers, will be able to find common ground with Chrysler's new owner, Cerberus Capital Management, at a time when sales have sputtered.

Chrysler is moving to idle production at six assembly plants this week to manage inventory levels. That includes a planned two-week shutdown at three UAW-represented factories, the company said.

Gettelfinger supported Cerberus' $7.4 billion acquisition of Chrysler from Daimler, which retains a nearly 20% stake in the automaker.

GM and the UAW agreed on the terms of a cost-saving contract on Sept. 28 that would give the largest U.S. automaker the ability to hire almost 17,000 lower-wage workers as higher-cost existing workers take early retirement packages still being hammered out by the two sides.

In a significant departure, the GM deal would shift the obligation for paying for retiree health care to a new trust fund aligned with the union, a concession expected to save GM almost $3 billion annually once it becomes effective.

The Axe for Non-Union Workers

Although the groundbreaking GM deal was expected to provide a blueprint for the union's talks with both Chrysler and Ford Motor , both of those automakers have expressed concerns about some aspects of the agreement.

One concern is that the health-care trust considered the centerpiece of the GM deal would not begin to produce cash savings for the automaker until 2010.

Under Cerberus, Chrysler has shifted its focus to improving cash flow and has been reviewing a list of assets that could be spun off.

In addition, Chrysler was never granted the same 2005 concessions on retiree health care that the union gave Ford and GM by agreeing to shift some costs to its work force. That issue has now been pulled into the UAW negotiations, people familiar with Chrysler's negotiating position have said.

Before talks began, Chrysler made clear that absent concessions to close a wage gap estimated at about $30 per hour between it and Japanese automakers operating in the United States, it would need to shift production out of the country.

Non-Union Workers Get the Axe

Meanwhile, Chrysler said it plans to cut about 1,500 more white-collar jobs than initially planned, a person briefed on the plan said on Tuesday.

Chrysler's current restructuring plan, announced in February at the time it was put up for sale by Daimler, included cuts of 13,000 jobs, including 2,000 salaried jobs, as part of a bid to return to profitability by 2009.

Chrysler now plans to cut the salaried work force by an additional 5 percent and the contract work force by 37 percent, the person said.

Chrysler declined to comment on the job cuts.

A 5 percent additional reduction of salaried workers represent about 500 white-collar jobs, while a 37 percent cut in contract jobs could mean the loss of more than 1,000 such positions.

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